Rose Associates to sell condo/co-op management arm, raise $300M multifamily fund
Posted On June 23, 2017
Terra Holdings to buy the business unit for undisclosed sum
By KATHERINE CLARKE
Rose Associates is selling the condominium and co-op management arm of its business to Terra Holdings, the parent company of brokerages Brown Harris Stevens and Halstead Property, The Real Deal has learned. The decision to sell comes as the firm looks to raise $300 million in equity for a multifamily acquisition fund.
From left: Adam Rose, Willam Zeckendorf, Arthur Zeckendorf, One Beacon Court and The Aldyn
Though the price wasn’t disclosed, Rose Associates co-president Adam Rose said the management arm represents about 15 percent of his development company’s total business. It includes the management operations of 8,250 units across 35 buildings in New York, such as One Beacon Court and the Aldyn at 60 Riverside Boulevard.
The deal gives Terra access to a new pool of prospective clients as well as a big boost in property management revenue. Its existing residential management platform consists of 400 properties with over 30,000 units, according to its website.
Terra is co-owned by brothers William Lie and Arthur Zeckendorf, who also run Zeckendorf Development, as well as Kent Swig and David Burris. A spokesperson for Terra was not immediately available for comment.
Rose Associates’ move to sell its condo and co-op management business comes as it looks to expand its own multifamily investment platform. The company, which owns rental buildings such as 70 Pine Street and the Chelsea Landmark on East 25th Street, has retained Riaz Cassum of HFF Securities, the real estate investment banking affiliate of brokerage HFF, to raise $300 million in equity for the acquisition of rental buildings, Rose said.
The management business was distracting the company from its core focus, Rose added. “It didn’t make sense for us anymore,” he said. Rose continues to operate a multifamily rental management platform. That aspect of the business is not included in the deal.
The decision to open itself to a wider pool of equity partners, including foreign and institutional funds, marks a big departure for the firm, which is among the most prominent real estate family dynasties in New York.
Founded in 1928 by David and Samuel Rose during the pre-Depression real estate boom, Rose Associates has operated predominantly with its own equity or in partnership with others of its ilk. At 210 Livingston Street in Brooklyn for instance, it partnered with family-run Benenson Capital Partners to build a 368-unit rental. Now, Rose says it’s time to scale the business by branching out with new types of partners.
Rose hopes to use the fund to convert existing industrial and commercial buildings to multifamily as well as to buy and renovate older rental stock. The firm is nearly done with the conversion of the Pine Street property, which it refinanced with a $375 million loan from from a syndicate of lenders including Bank of China and ING in April.
“We can take our 90-year track record and leverage it much more effectively than what we’ve done,” Rose said. “We’ve got the skills so sharpened to do this.”
About Rose Associates, Inc.
Based in New York, Rose Associates is a developer, owner and operator of premium residential properties. From planning a new development to managing day-to-day property operations, the Rose 360 Platform offers a full range of services designed to maximize the value of real estate. The firm oversees more than 26,000 units across New York, with approximately $2 billion in projects under development. Rose recently opened the historic skyscraper 70 Pine Street, which the firm is transforming into a luxury rental property with 644 residential units, 132 extend-stay apartments and a destination restaurant/lounge occupying the top four floors.